Investment in potential COVID treatment & Placing

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, REPUBLIC OF IRELAND, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.  THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF VELA TECHNOLOGIES PLC IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.

20 October 2020

Vela Technologies plc

("Vela" or "the Company")

£2.35 million investment in potential COVID-19 treatment for diabetic patients

Placing to raise £1.25 million

Highlights

·      Vela (AIM: VELA) has acquired an economic interest in a late-stage Phase II therapeutic project to develop a potential coronavirus treatment for diabetics

·      Strategic partners in the project include, amongst others, a major global pharmaceutical company, UKRI - UK Research and Innovation, Professor Sir Christopher Evans and Mubadala - the UAE sovereign wealth fund

·      Following completion of a £10.3 million investment in August 2020, the project is now fully funded with results of current Phase II trial expected in Q2 2021

·      Consideration of £2.35 million satisfied by Vela raising £1.25 million via a placing of new ordinary shares at 0.065 pence per share and the issuance of 1,100,000,000 locked-in consideration shares at a price of 0.1 pence per share

Introduction

The Board of Vela is pleased to announce that it has entered into an agreement (the "Agreement") with St George Street Capital Limited ("SGS" or "St George Street"), whereby Vela has acquired an economic interest in the potential commercialisation of SGS's asset to treat individuals with diabetes who are suffering with COVID-19.

In addition, the Company announces that it has raised £1.25 million (before expenses) by way of a placing of 1,923,076,923 new ordinary shares in the Company (the "Placing Shares") at a price of 0.065 pence per Placing Share (the "Placing Price") (together "the "Placing"). The net proceeds of the Placing will be used to satisfy the cash consideration payable to SGS under the Agreement, further details of which are set out below. The Placing has been undertaken pursuant to the Company's existing share authorities.

Further information on St George Street

St George Street is a UK-based medical-charity led by a group of highly decorated academics and ex-pharma executives formed to deliver much needed treatments to patients. SGS's strategy is to take clinical-ready assets from pharmaceutical companies and to progress them through Phase II medical trials, before licensing them on for Phase III trials and commercialisation in order to create a return for investors and the charity alike.

Under an agreement entered into in August 2019, SGS has acquired the right to develop and commercialise two assets from a major global pharmaceutical company, one of which includes the licence to a drug that could be beneficial to diabetic patients suffering with COVID-19 (the "Asset"). Diabetics have significantly higher mortality compared with non-diabetic patients in COVID-19 and in clinical studies this drug, SGS002, has been found to be safe in almost 1,000 patients with diabetes and has a blood glucose lowering effect for four months. Blood glucose control has been proposed as a key factor in reducing complications from COVID-19 in diabetics.

SGS is proposing to recruit up to 150 patients for a clinical trial to test SGS002, which it estimates will take 5 months to complete. SGS is working to a compressed timescale given the urgency of the COVID-19 situation and anticipates reaching clinical stage in early May 2021.

Details of the Agreement with St George Street

Pursuant to the agreement entered into between SGS and the major global pharmaceutical company, there are two potential commercialisation routes, being a reacquisition of the Asset or a sub-licensing of the rights to a third party.

Under the terms of the Agreement, pursuant to either commercialisation route for the Asset, SGS will pay Vela 8 per cent. of proceeds received by SGS in excess of £19.2 million and after deduction of sums payable to the major pharmaceutical company and certain funders, and provision for taxation (the "Economic Interest"). Vela's Economic Interest shall be renegotiated should SGS receive further funding from third parties in the future.

Under the terms of the Agreement, Vela will pay consideration of £2.35 million to SGS for the Economic Interest. Of the consideration payable, £1.1 million will be satisfied by the issue of 1,100,000,000 new ordinary shares in Vela (the "Consideration Shares"), at a price of 0.1p per Consideration Share, being a premium of 56.9 per cent. to the Company's closing mid-market price of 0.06375 pence on the day prior to this announcement. The Consideration Shares will be subject to a lock-in agreement until the successful completion of Phase II of the trial, named ARCADIA, or for a period of two months following completion of the ARCADIA trial, should the outcome of the trials not meet the minimum threshold. The remaining consideration of £1.25 million will be paid by Vela to SGS in cash, funded from the net proceeds of the Placing and from the Company's existing cash resources.

On completion of the investment SGS will hold 1,100,000,000 ordinary shares in Vela representing 9.37 per cent. of the issued share capital of the Company, as enlarged by the Placing and the issue of the Consideration Shares.

Details of the Placing

The Company has raised £1.25 million via the placing of 1,923,076,923 new ordinary shares in the Company at the Placing Price. The net proceeds of the Placing will be used to satisfy the cash consideration payable to SGS under the Agreement.

The Placing Price represents a premium of approximately 2 per cent. on Vela's closing mid-market price of 0.06375 pence on 19 October 2020, the day prior to this announcement.

The Placing Shares have been placed by Peterhouse Capital Limited, as agent and broker to the Company, with certain existing and new investors.

In addition, 961,538,461 warrants to subscribe for new ordinary shares in the Company (the "Placing Warrants") are to be granted to subscribers in the placing, whereby each subscriber will receive 1 warrant for every 2 Placing Shares subscribed for. The Placing Warrants are exercisable at a price of 0.15 pence per Placing Warrant and will be exercisable until 23 October 2021. The Placing Warrants will not be admitted to trading on AIM or any other stock market and will not be transferable.

Admission and Total Voting Rights

Application will be made to the London Stock Exchange for the Placing Shares and the Consideration Shares to be admitted to trading on AIM.

It is expected that the Placing Shares will be admitted to trading on AIM on or around 23 October 2020 and it is expected that the Consideration Shares will be admitted to trading on AIM on or around 26 October 2020. Following admission to trading on AIM of the Placing Shares and the Consideration Shares ("Admission"), the Company will have 11,737,404,749 ordinary shares of 0.01p each in issue, each with one voting right. There are no shares held in treasury. Therefore the Company's total number of ordinary shares and voting rights will be 11,737,404,749 and this figure may be used by Shareholders from Admission as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.

James Normand, Executive Director of Vela, commented:

"Vela is pleased to have been invited to participate in such a prestigious and genuinely ground-breaking project as this and is delighted to invest alongside internationally respected stakeholders such as Professor Sir Christopher Evans, UKRI and Mubadala. The Board of Vela looks forward to providing shareholders with news on the outcome of these trials as this highly regarded team pursues its quest for a drug to provide a therapeutic treatment for the effects of COVID-19 on diabetic patients."

MAR

The Market Abuse Regulation (MAR) became effective from 3 July 2016. Market soundings, as defined in MAR, were taken in respect of the Placing with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.

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About Vela Technologies   

Vela Technologies (AIM: VELA) is an investing company focused on early stage and pre-IPO long term disruptive technology investments. Following the investment announced today there will be seven investments in the portfolio which have either developed ways of utilising technology or are in the process of developing technology with a view to disrupting the businesses or sector in which they operate. More recently, Vela Technologies has broadened its focus to include existing listed companies where valuations may offer additional opportunities.